Bruno Iksil may have—with an unwanted assist from hedge funds—cost his employers almost five times as much as originally thought.

Iksil, the JPMorgan Chase trader behind the credit default swap index trade that is costing the bank a fortune, may be responsible for a loss of $9 billion. JPMorgan CEO Jamie Dimon said last month that the loss was only $2 billion, although Dimon acknowledged that it could grow—to $4 billion.

According to The New York Times, JPMorgan's losses have been mounting in recent weeks, despite the bank's use of BlueMountain Capital Management to help it unwind the trade, and the exit of several hedge funds who profited at the bank's expense from their end of the trade.

JPMorgan has already cleared more than half of Iksil's position—it originally said it planned to exit the trade completely by early next year, but now may clear it by the end of this one. With the position closing so quickly, an internal report shows a worst-case scenario of an $8 billion to $9 billion loss.

JPMorgan said it will disclose more information about the loss on July 13.

From the current issue of

MODERN TRADER explores the effect of a potential trade war on U.S. equity markets. Will it end the bull run or will low interest rates allow U.S. equities to maintain its momentum? Read on. We also attempt to identify the key drivers of active equity hedge funds.